A new take on things

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You hear mostly the same old hash on these pages – rehashed a lot. That’s because I am trying to repeat over and over until I get traction (unlikely, hey Mikel?).

Anyway, I just had a very interesting conversation (albeit short) with a bunch of business people from a rural area of NB.

Here’s their comment. The government for the last 20 years has tied virtually all funding programs to new jobs created. Jobs. Jobs. Jobs. So companies had no incentive to automate or move to productivity through expansion. Rather, if they created more jobs, they got government funding.

So now they have inefficient, labour intensive operations and that is keeping wages depressed, leading to worker shortages, etc.

They are arguing now that government should flip that on its ear and have incentives to become more efficient and less labour intensive which would allow them over time to raise wages and be more competitive.

In effect, they are saying that direct government policy – federal and provincial – has directly contributed to the depression of private sector wages in New Brunswick – at least in the sectors where government has been active with financial support (imagine the sound of teeth gritting, that would be NB Taxpayer) such as manufacturing, tourism and even high tech industries. If you have money out there to give to companies but it is predicated only on job creation, you will get more jobs.

I have taken a considerable amount of time to think about this (30 minutes) and I can see a thread of common sense here. Quite frankly, I think we have spent a lot of time and effort looking at little things like a few bucks for this firm, a few bucks for that firm -without an overall strategy and plan for the future. For example, has all of this funding (and again relative to other provinces we are below average so let’s have perspective) led to real, sustainable growth?

The e-Learning industry is a sector I keep coming back to. It was highly subsidized by government either through direct funding programs or government contracts. This, at least theoretically, doesn’t bother me. A lot of Ottawa firms that are now very successful got their start with large government contracts. But you have to draw those straight lines. I have often said that the government should have spent a few bucks on a post mortem of the e-Learning sector to tell us exactly what went wrong. This isn’t small change. I estimate that close to 2,000 jobs were wiped out in that sector and millions in government funding.

So, that is a bit off track but still relevant. If the government wants to support industries (not just gravy either even tax breaks, infrastructure or R&D funding), it should be linked to a success strategy. And it seems to me that those bright policy makers in Fredericton should have realized that a jobs, jobs, jobs approach might have led to more labour-intensive, lower wage outcomes.

But back to the jobs, jobs, jobs, thing for a moment. We are in population decline – as it is. So for government to come out and say we are shifting our focus and looking to help companies become more efficient and we will applaud those that shed jobs, would be counter to the broader goal of sustaining our communities.

So, again with just a small amount of mindshare, I would suggest we still need to focus on attracting industries to this province in a smart and coordinated way. And we need to make strategic investments in infrastructure, training and other tools to help New Brunswick become a top destination for certain industries. As for the local entrepreneurs and SMEs, I think (in conjunction with the first approach) that policies should be tuned towards efficiency, productivity and clear, sustainable competitive advantage over time and not just on jobs, jobs, jobs.

You know this stuff. I just fear that a ‘policy’ shift away from job creation will end up being the entire focus and dragging everybody down.